At the CMP of Rs.64, JSL is trading at an EV/EBITDA of 5.2 x FY19E. We initiate with a BUY on JSL with a target price of Rs.127 (FY21 EV/EBITDA of 5x), which represents an upside of 98.4% over 18 months.

We initiate coverage with a BUY for a price target of Rs 270 representing an upside of 22.7% from the CMP of Rs 220 over the next 24 months. We expect the revenues to grow by 12% CAGR to INR 2485 crores by FY2021. On the back of robust revenues, we expect the EBITDA and PAT to grow to Rs 410 crores (18.8% CAGR) & Rs 277.3 crores (15.7% CAGR) respectively by FY21. Operating margins are also set to improve by 120 bps to 16.5% by FY21. Return ratios ROE & ROCE are also expected to remain elevated at 17.1% and 18.6% respectively.

Sterlite Technologies Ltd. (STL) is a fully integrated telecom networking infrastructure play with the lowest costs globally. With demand for fiber expected to grow at a rapid pace as faster 4G/5G networks are rolled out and new age technologies such as IoT, augmented reality, virtual reality, cloud computing etc. become common place, STL is best placed to benefit from this.